All the drama and reported infighting surrounding Bank of America’s M&A team has come home to roost. The firm continued it slide down the M&A league tables during the third quarter amid reports of frustration among M&A bankers about the firm’s shrinking appetite for taking risks.
On the heels of a lousy second quarter in M&A, Bank of America fell from fourth to sixth in the global league tables for the first nine months of the year, according to new numbers from Dealogic. The bank recorded $723m in global advisory revenue during the first three quarters of the year, half that of third-place Morgan Stanley and 2.5 times less than first-ranked Goldman Sachs.
“The team knows they can do a better job, and they’re after it,” Chief Executive Brian Moynihan said of the bank’s M&A business following the second quarter, when revenues fell 42% year-on-year. If anything, the third quarter performance may have been worse. Bank of America’s global market share fell to 3.9% through nine months, according to Dealogic, down from 4.02% during the first half of the year. It has advised on 141 deals this year, 21 fewer than boutique investment bank Lazard.
In the Americas, BofA dropped to eighth in the M&A league tables through three quarters, down from 4th a year ago. The $341m it booked in the region as of the end of September is three times less than Goldman Sachs, which topped the list. Bank of America now sits behind Credit Suisse in its home territory.
The news comes just two weeks following the departure of investment banking chief Christian Meissner, who was said to have left over disagreements with the firm’s increasingly conservative strategy. Following a $300 million loss in December from its dealings with South African furniture maker Steinhoff International, executives at Bank of America reportedly pulled in the reins and scrapped “years-long” plans to expand key lines of business within its investment bank, particularly in emerging markets, according to Bloomberg.
M&A bankers, including several managing directors in the U.S., reportedly began defecting in large numbers starting in the spring, though Bank of America said at the time that its turnover rates were in line with previous years. With Meissner now gone, more executives are said to be weighing their departure. If that happens, the bank could fall even further down the M&A league tables.
In fairness to Moynihan, Bank of America managed to beat analyst expectations during Q2, despite the precipitous drop in M&A revenue. Being risk-averse and cutting expenses has its advantages.
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